Prospects good for long term copper price, despite current volatility – by Sahar Fatima (CIM Magazine – August 24, 2018)

Lack of major copper discoveries mean supply will likely fall short of demand in next decade

Despite current operations’ ability to feed copper demand in the near term, the dearth of large-scale copper discoveries over the last decade means there will not be enough new deposits coming into production to keep the market balanced, an S&P Global Market Intelligence report says.

“Large deposit discovery rates just haven’t turned around. There haven’t been any increases in the last five years, really,” the report’s author, Kevin Murphy, a senior analyst at S&P Global Market Intelligence’s Metals and Mining Research, said in an interview.

Companies are spending more on finding new copper reserves than they have historically. In the last 10 years, global spending on copper exploration was US$26.6 billion, which is more than double the US$12.4 billion spent in the preceding 18 years, according to the report, which was released this summer.

But only about 140 million tonnes of copper was defined in 29 discoveries over the last decade, compared with 862.8 million tonnes in 191 discoveries in the preceding period.

(There may have been other, smaller-scale discoveries, Murphy said, but they were not significant enough to have an impact on the market. The report’s dataset includes all deposits containing over 500,000 tonnes in reserves, resources and past production, with rare exceptions.)

Almost two-thirds of the copper discovered in the last decade is contained in the four largest deposits, the report says. The biggest is the Pampa Escondida deposit in Chile, co-owned by BHP, Rio Tinto and a Japanese industrial consortium, followed by Ivanhoe Mines’ Kamoa-Kakula discovery in the Democratic Republic of the Congo.